Joint impact of service efficiency and salvage value on the manufacturer’s shared vehicle-type strategies

Abstract

With the rapid development of the sharing economy, many traditional automobile manufacturers have been choosing to provide the car sharing service. Some manufacturers share GVs, while others introduce EVs in the sharing market. We develop a model that a monopoly manufacturer who simultaneously sells GVs and EVs and discuss which type of vehicles should the manufacturer launch in the sharing market considering the service efficiency and the salvage value. Our findings are that no matter which type of vehicles the manufacturer shares, EV sales remain the same, but GV sales are reduced. This means that the manufacturer’s EV-sharing strategy always promotes EVs’ adoption. It is found that when both the service efficiency ratio of EV to GV and the salvage value gap between them are low or high, the manufacturer launches EVs; otherwise, the manufacturer launches GVs. We also find that the equilibrium vehicle-type strategy can maximize the manufacturer’s profit while being the most environmentally friendly only if the valuation of shared product is high. Through numerical analysis, we know that, although the manufacturer’s GV-sharing strategy worsens the environment, it always improves the social welfare. Notably, the manufacturer’s EV-sharing strategy is not always beneficial for the environment, especially if the service efficiency ratio is relatively high. Similarly, the manufacturer’s EV sharing does not always improve the social welfare, especially if the service efficiency ratio is in the middle range. The findings not only contribute to guiding the manufacturer’s vehicle-type strategies for car sharing, but also providing potential policy implications for the government’s effort in promoting EVs’ adoption.